Prudential analyst Jesse Tortora last night claimed Apple's iPhone has already entered production.

While the company is keeping its silence regarding any future plans to ship an iPod phone, the analyst states "the production ramp has already begun," a strong signal that the device could debut at Macworld Expo, San Francisco, but may not go on sale until late in the first quarter.

Tortora also notes that a second 'smart' iPhone (combining elements of a PDA) could ship in the third quarter, a few months after Mac OS X 10.5 'Leopard' ships.

The analyst also expects a wide-screen "true" video iPod will enter production in the first quarter of 2007.

Overall, Prudential predicts Apple will sell seven million of its phones next year, and 15 million the year after that. Additionally, he predicts Apple will increase the number of games it develops internally, positing the possibility that the company may even make an attempt to penetrate the video games market.

There may be a lot more to the iPhone than its predicted existence as a hybrid mobile phone/iPod.

Mac OS X 10.5 introduces a host of technologies that make thin clients possible, including the capacity (through Time Machine) to save data remotely to hard drives and online services.

New features in iCal (based on CALDev); and new capacities within Mac OS X Server tend to reinforce claims made in an AppleInsider report, which states that an elite engineering squad has been working on a smart phone device "for several years".

"People familiar with ensuing talks say the "real push" behind the device was its extensive integration with Mac OS X and the Macintosh platform," this report claims.

It says that the company has demonstrated some of the features of the device to some parties, and that these rely on an unreleased version of .Mac.

Claimed features include the capacity to control certain Mac functions remotely, beaming contacts, remote control and access to calendars and appointment schedules, and more.